Principal Financial Group, Inc. (NASDAQ:PFG) is poised for growth driven by increase in assets under management, rising investment income and prudent capital deployment.
The company surpassed estimates in three of the last four quarters and missed estimates in the remaining quarter, the beat being 0.29%, on average.
The stock carries a VGM Score of A. VGM Score helps to identify stocks with the most attractive value, best growth and the most promising momentum.
What Makes It an Attractive Pick?
The company has been witnessing growth in assets under management (AUM) on the back of improved performance at three asset management and asset accumulation segments. In 2019, positive net cash, combined with favorable investment performance of the company, contributed to growth in AUM. Strategic acquisitions, operational discipline and extensive distribution footprint of the company are expected to boost growth in AUM.
The company also witnessed improved investment income, which contributes to its revenue growth. In the last five years, investment results increased nearly 3%. In 2019, the metric rose 10.2% from the year-ago period.
Banking on strong operational performance, Principal Financial deploys capital effectively via dividends and share repurchases to enhance shareholder value. In January 2020, the company hiked its quarterly dividend to 55 cents per share from its prior dividend payout of 55 cents. Its current payout ratio is 39%. This means it paid out 38% of its trailing 12-month EPS as dividend. Its dividend yield of 7.2% compares favorably with the industry average of 4.4%.
The Zacks Consensus Estimate for 2020 and 2021 earnings per share is pegged at $6.03 and $6.59, indicating increase of nearly 8.1% and 9.3%, respectively, from the year-ago reported figure. The expected long-term earnings growth rate is 8.3%.
Shares of this Zacks Rank #2 (Buy) company have lost 40.1% in the past year, compared with the industry’s decline of 32.3%. Nevertheless, its solid fundamentals are likely to help the stock regain its momentum going forward.
Other Stocks to Consider
Some other top-ranked stocks from the space include Medley Capital Corporation (NYSE:MCC) , Lazard Ltd. (NYSE:LAZ) and Cohen & Steers, Inc. (NYSE:CNS) each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Medley Capital surpassed estimates in the last four quarters, the positive surprise being 93.33%, on average.
Lazard surpassed estimates in the last four quarters, the positive surprise being 29.07%, on average.
Cohen & Steers surpassed estimates in two of the last four quarters, the positive surprise being 2.59%, on average.
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Lazard Ltd (LAZ): Free Stock Analysis Report
Principal Financial Group, Inc. (PFG): Free Stock Analysis Report
Cohen & Steers Inc (CNS): Free Stock Analysis Report
Medley Capital Corporation (MCC): Free Stock Analysis Report
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